PARSIPPANY, N.J., Oct. 27, 2021 /PRNewswire/ -- Wyndham Hotels & Resorts (NYSE: WH) today announced results for the three months ended September 30, 2021. Highlights include:

• U.S. RevPAR exceeded 2019 levels by 7%, growing 59% versus 2020.
• System-wide rooms grew 60 basis points sequentially, including 40 basis points of growth in the U.S. and 80 basis points of growth internationally.
• Diluted earnings per share of $1.09 compared to $0.29 in third quarter 2020; adjusted diluted EPS of $1.16 compared to $0.36 in third quarter 2020.
• Net income of $103 million compared to $27 million in third quarter 2020; adjusted net income of $109 million compared to $34 million in third quarter 2020.
• Adjusted EBITDA of $194 million compared to $103 million in third quarter 2020.
• Net cash provided by operating activities of $147 million compared to $97 million in third quarter 2020; free cash flow of $141 million compared to $92 million in third quarter 2020.
• Returned $50 million to shareholders in the quarter through $27 million of share repurchases and a quarterly cash dividend of $0.24 per share.
• Board of Directors recently authorized a 33% increase in the quarterly cash dividend to pre-pandemic level of $0.32 per share beginning with the dividend expected to be declared in fourth quarter 2021.
• Company raises full-year 2021 outlook.

"Our resilient select-service franchising business model continues to lead the industry's recovery with RevPAR well in excess of 2019 levels. These results have been fueled by the many investments we made over the last two years to capture an increasing share of both leisure and everyday business travel," said Geoffrey A. Ballotti, president and chief executive officer. "Developer interest in our brands is strong. Our pipeline grew another 440 basis points and is now at pre-pandemic levels. At the same time our teams opened over 50% more rooms than we opened last year, and more rooms than we opened in the third quarter of 2019. Our diversified brand portfolio, now including our newly launched upper midscale all-inclusive brand, Alltra, and compelling owner value proposition, combined with our asset-light business model positions us to deliver strong free cash flow and shareholder returns well into the future."

Fee-related and other revenues increased 48% to $377 million compared to $255 million in the third quarter of 2020 primarily reflecting the ongoing recovery in travel demand and its impact on global RevPAR, which has now recovered to 97% of 2019 levels, including domestic RevPAR at 7% above 2019.

The Company generated net income of $103 million, or $1.09 per diluted share, compared to net income of $27 million, or $0.29 per diluted share, in the third quarter of 2020. The increase of $76 million, or $0.80 per diluted share, reflects the increase in fee-related and other revenues and lower net interest expense, partially offset by higher volume-related expenses due to the ongoing recovery in travel demand.

The following discussion of third quarter operating results focuses on the Company's key drivers as well as revenue and adjusted EBITDA for each of the Company's segments. Full reconciliations of GAAP results to the Company's non-GAAP adjusted measures for all reported periods appear in the tables to this press release.

System Size

Year-to-date, the Company's global system grew 80 basis points, reflecting quarter-over-quarter sequential growth of 60 basis points driven by 40 basis points of growth in the U.S. and 80 basis points of growth internationally. Third quarter room openings exceeded 2019 levels by 4% globally reflecting a 46% increase in domestic additions. The Company's annualized retention rate through third quarter stood at approximately 95%, putting the Company solidly on track with its goal of achieving a 95% retention rate and its net room growth outlook of 1.5 to 2% for the full year 2021.

RevPAR

Global and international RevPAR began to lap the onset of the COVID-19 pandemic in January 2021, while the U.S. began to lap its onset in March 2021. As such, comparisons to 2019 (on a two-year, constant currency basis) are more meaningful when evaluating trends. On this basis, third quarter RevPAR in the U.S. exceeded 2019 levels by 7% while global RevPAR recovered to 97% of 2019 levels and international RevPAR declined 25%. The 7% increase in the U.S. represents continued sequential improvement compared to a decline of 5% in the second quarter of 2021. Notably, RevPAR for the Company's economy brands exceeded 2019 levels by 14% in the third quarter. The 25% international decline demonstrates strong sequential progress from a 44% decline in second quarter led by growth in regions where travel restrictions subsided. Canada improved 32 points to a 17% decline and EMEA improved 43 points to a 25% decline, partially offset by a 10 point sequential decrease to a 17% decline in China due to travel restrictions resulting from local COVID outbreaks in August and September.

Business Segment Results

Hotel Franchising revenues increased 43% year-over-year to $337 million primarily due to the global RevPAR increase. Hotel Franchising adjusted EBITDA increased 62% to $193 million reflecting the growth in revenues as well as a timing benefit from the marketing fund, partially offset by higher volume-related expenses.

Hotel Management revenues increased 25% year-over-year to $126 million, including a $4 million increase in cost-reimbursement revenues, which have no impact on adjusted EBITDA. Absent cost-reimbursements, Hotel Management revenues increased $21 million, or 111%, to $40 million primarily due to the global RevPAR increase, as well as improved performance at the Company's owned hotels. Hotel Management adjusted EBITDA increased $14 million year-over-year reflecting the revenue increases, partially offset by higher volume-related expenses, and reflecting significant margin expansion (excluding cost reimbursements) to 40% in 2021 from 11% in 2020.

During the third quarter 2021, the Company's marketing fund revenues exceeded expenses by $19 million; while in third quarter 2020, the Company's marketing fund expenses exceeded revenues by $8 million.

Development

The Company awarded 151 new contracts this quarter, 3% higher than 2019. On September 30, 2021, the Company's global development pipeline consisted of over 1,450 hotels and approximately 193,000 rooms. The pipeline grew 440 basis points year-over-year and 120 basis points sequentially - including 90 basis points domestically and 140 basis points internationally. Approximately 65% of the Company's development pipeline is international and 76% is new construction, of which approximately 34% has broken ground.

Cash and Liquidity

The Company generated $147 million of net cash provided by operating activities in the third quarter of 2021 compared to $97 million in third quarter 2020. The Company generated $141 million of free cash flow in the third quarter of 2021 compared to $92 million in the third quarter 2020.

At September 30, 2021, the Company had $193 million of cash on its balance sheet and approximately $930 million in total liquidity. The Company's net debt leverage ratio was 3.7 times at September 30, 2021 and within the Company's 3 to 4 times stated target range.

Share Repurchases and Dividends

During the third quarter of 2021, the Company repurchased approximately 374,000 shares of its common stock for $27 million at an average price of $73.13 per share.

The Company paid common stock dividends of $23 million, or $0.24 per share, in the third quarter of 2021. The Company's Board of Directors authorized a 33% increase in the quarterly cash dividend to pre-pandemic level of $0.32 per share, beginning with the dividend expected to be declared in fourth quarter 2021.

2021 Outlook

The Company updated its outlook for full-year 2021 as follows:

• Net rooms growth of 1.5% to 2% versus our prior outlook of 1% to 2%.
• RevPAR growth of approximately 43% versus 2020, or a decline of approximately 14% compared to 2019, which is improved from growth of approximately 40% versus 2020, or a decline of approximately 16% compared to 2019.
• Fee-related and other revenues of $1.21 billion to $1.23 billion, up from $1.16 billion to $1.19 billion.
• Adjusted EBITDA of $560 million to $570 million, up from $525 million to $535 million.
• Adjusted net income of $275 million to $285 million, up from $244 million to $254 million.
• Adjusted diluted EPS of $2.93 to $3.03, up from $2.60 to $2.70, based on a diluted share count of 94.0 million that excludes any share repurchases after September 30, 2021.
• Free cash conversion from Adjusted EBITDA of approximately 60%, up from approximately 55%.

More detailed projections are available in Table 8 of this press release. The Company is providing certain financial metrics only on a non-GAAP basis because, without unreasonable efforts, it is unable to predict with reasonable certainty the occurrence or amount of all of the adjustments or other potential adjustments that may arise in the future during the forward-looking period, which can be dependent on future events that may not be reliably predicted. Based on past reported results, where one or more of these items have been applicable, such excluded items could be material, individually or in the aggregate, to the reported results.

Conference Call Information
Wyndham Hotels will hold a conference call with investors to discuss the Company's results and outlook on Thursday, October 28, 2021 at 8:30 a.m. ET. Listeners can access the webcast live through the Company's website at www.investor.wyndhamhotels.com. The conference call may also be accessed by dialing 877 876-9173 and providing the passcode "Wyndham". Listeners are urged to call at least five minutes prior to the scheduled start time. An archive of this webcast will be available on the website beginning at noon ET on October 28, 2021. A telephone replay will be available for approximately ten days beginning at noon ET on October 28, 2021 at 800 839-4992.

Presentation of Financial Information
Financial information discussed in this press release includes non-GAAP measures, which include or exclude certain items. These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors as an additional tool for further understanding and assessing the Company's ongoing operating performance. The Company uses these measures internally to assess its operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. Exclusion of items in the Company's non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. Full reconciliations of GAAP results to the comparable non-GAAP measures for the reported periods appear in the financial tables section of this press release.

About Wyndham Hotels & Resorts
Wyndham Hotels & Resorts (NYSE: WH) is the world's largest hotel franchising company by the number of properties, with approximately 9,000 hotels across nearly 95 countries on six continents. Through its network of approximately 803,000 rooms appealing to the everyday traveler, Wyndham commands a leading presence in the economy and midscale segments of the lodging industry. The Company operates a portfolio of 22 hotel brands, including Super 8®, Days Inn®, Ramada®, Microtel®, La Quinta®, Baymont®, Wingate®, AmericInn®, Hawthorn Suites®, Trademark Collection® and Wyndham®. Wyndham Hotels & Resorts is also a leading provider of hotel management services. The Company's award-winning Wyndham Rewards loyalty program offers over 90 million enrolled members the opportunity to redeem points at thousands of hotels, vacation club resorts and vacation rentals globally. For more information, visit www.wyndhamhotels.com. The Company may use its website as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Disclosures of this nature will be included on the Company's website in the Investors section, which can currently be accessed at www.investor.wyndhamhotels.com. Accordingly, investors should monitor this section of the Company's website in addition to following the Company's press releases, filings submitted with the Securities and Exchange Commission and any public conference calls or webcasts.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the federal securities laws, including statements related to Wyndham Hotels' current views and expectations with respect to its future performance and operations, including revenues, earnings, cash flow and other financial and operating measures, share repurchases and dividends, restructuring charges and statements related to the coronavirus pandemic ("COVID-19"). Forward-looking statements include those that convey management's expectations as to the future based on plans, estimates and projections at the time Wyndham Hotels makes the statements and may be identified by words such as "will," "expect," "believe," "plan," "anticipate," "intend," "goal," "future," "outlook," "guidance," "target," "objective," "estimate," "projection" and similar words or expressions, including the negative version of such words and expressions. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Wyndham Hotels to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.

Factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, general economic conditions; the continuation or worsening of the effects from COVID-19, its scope, duration and impact on the Company's business operations, financial results, cash flows and liquidity, as well as the impact on the Company's franchisees and property owners, guests and team members, the hospitality industry and overall demand for travel; the success of the Company's mitigation efforts in response to COVID-19; the Company's performance in any recovery from COVID-19; the performance of the financial and credit markets; the economic environment for the hospitality industry; operating risks associated with the hotel franchising and management businesses; the Company's relationships with franchisees and property owners; the impact of war, terrorist activity, political instability or political strife; concerns with or threats of pandemics, contagious diseases or health epidemics, including the effects of COVID-19 and any resurgence or mutations of the virus and actions governments, businesses and individuals take in response to the pandemic, including stay-in-place directives and other travel restrictions; risks related to restructuring or strategic initiatives; risks related to the Company's relationship with CorePoint Lodging; the Company's ability to satisfy obligations and agreements under its outstanding indebtedness, including the payment of principal and interest and compliance with the covenants thereunder; risks related to the Company's ability to obtain financing and the terms of such financing, including access to liquidity and capital as a result of COVID-19; and the Company's ability to make or pay, plans for, and the timing and amount of any future share repurchases and/or dividends, as well as the risks described in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and any subsequent reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, subsequent events or otherwise.